Wiley Accounting
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Discussion Topics for Today's Classroom

Conflict? What conflict?

From August 26th to 30th, Canada’s smallest province, Prince Edward Island, hosted the 55th annual conference of Canadian premiers. This gathering is sometimes also know as the Council of the Federation. During these sessions, the various premiers discuss issues of common interest, and they communicate with the public on the results of their deliberations through news releases and communiques.

Perhaps one of the unexpected outcomes of this year’s meeting was a controversy over the approximately $450,000 in conference costs funded by various corporate and union sponsorships. The Ottawa Citizen first raised the issue. Then, a local PEI daily paper, The Guardian of Charlottetown, began pressing the host premier, Robert Ghiz on the appropriateness of the corporate funding. The Guardian’s front page article of Thursday, August 28, captured much of the controversy through its title alone “Premiers conference costs, corporate sponsorship raise eyebrows.”

Premier Ghiz responded that he did not see any conflict of interest in having the corporate sponsorship for this event. Although the sponsorships allow companies to attend various receptions and social events as part of the conference events, Premier Ghiz did not seem to feel that the companies gained any influence via their sponsorships. According to the Guardian, Robert Ghiz stated “In my opinion, it’s about supporting democracy.” He went on to add that corporate sponsors save the taxpayers’ money. When asked about a reported purchase of expensive Shania Twain concert tickets for a number of conference attendees, Premier Ghiz replied that he did not know the details on how the sponsorship money was spent.

Others, however, might not feel quite as comfortable with this arrangement as the Prince Edward Island Premier does. John Bradley, a retired military officer and long-time observer of the PEI political scene, indicated some displeasure with Premier Ghiz’s rationale. Further, auditing students have long known that independence must be both in fact and appearance. One would have to ask to what extent the corporate sponsorship of the premiers’ gatherings might impair the appearance of our political leaders’ independence.

What do you think?

1) What do you think about the corporate sponsorship of the Premiers conference?

2) What parallels do you see between this news story and the issue of audit independence for auditors of financial statements?

3) Assume for a moment you are in a position of authority at the head office of one of the potential corporate sponsors of this premiers conference. What would be some of the key factors you would consider in making a decision whether to contribute?